"The widespread increase in global food prices due to the conflict between Russia and Ukraine will have an indirect impact on Angola due to food price inflation, but fortunately the rise in oil prices has strengthened the value of Angola's currency to around of 640 kwanzas per dollar, the highest value since October 2019, which will mitigate some of the increased costs of imported goods", say the analysts.
In a comment on price developments in Angola in February, Oxford Economics Africa warns that "the war between Russia and Ukraine could have a direct impact on Angola if imports of wheat and fertilizers from Russia were adversely affected", but points out that the impact on price developments will only be indirect.
In addition to the strengthening of the kwanza against the dollar in recent months and the increase in tax revenues through the increase in the price of oil, "consumers are also benefiting from the Government's decision, in October 2021, to cut the VAT rate of essential goods from 14 percent to 7 percent", the analysts point out in the note to which Lusa had access.
"An appreciation of the average exchange rate of the kwanza and a drop in the global price of food from the second half of the year will help the inflation rate to slow down from an average of 25.8 percent in 2021 to 19.9 percent this year" , points out Oxford Economics.
The year-on-year inflation rate in Angola dropped compared to the same value of the previous month in February for the first time since March last year, despite remaining close to 30 percent, according to data from the National Institute of Statistics of Angola, released last week.
Since March 2021, year-on-year inflation has risen consistently, from 24.77 percent in March 2021, to 27.66 percent in January and 27.28 percent in February this year, the month that registered the first slowdown in price increases.
